1957 (3) TMI 40 - HC - Companies Law

Summary

Issues Involved:
1. Whether the compensation awarded by the Industrial Tribunal to the workmen should be paid in priority to all other debts of the company under section 230(1)(c) of the Companies Act, 1913.
2. Validity of the attachment made by the Collector of Hyderabad against the company's property.

Detailed Analysis:

Issue 1: Preferential Payment of Compensation under Section 230(1)(c) of the Companies Act, 1913
The primary issue was whether the compensation awarded by the Industrial Tribunal to the workmen should be considered "wages" and thus entitled to preferential payment under section 230(1)(c) of the Companies Act, 1913. The court examined the definition of "wages" under various statutes, including the Industrial Disputes Act and the Payment of Wages Act. It was determined that the compensation awarded was not for services rendered within the two months preceding the winding up of the company. The court noted that "wages" as defined in section 230(1)(c) must be for services rendered to the company and not sums payable upon termination of employment. Therefore, the compensation awarded by the Industrial Tribunal did not qualify as "wages" under section 230(1)(c).

Issue 2: Validity of the Attachment by the Collector
Given that the compensation did not qualify as preferential payment, the attachment made by the Collector of Hyderabad against the company's property was deemed invalid. The court held that since the compensation was not entitled to priority under section 230, the attachment ordered by the Collector lacked jurisdiction and was set aside.

Conclusion:
The court concluded that the compensation awarded to the workmen by the Industrial Tribunal was not "wages" in respect of services rendered within the meaning of section 230(1)(c) of the Companies Act, 1913. Consequently, the attachment made by the Collector of Hyderabad against the company's property was set aside. The petition was allowed with costs against respondents 1 and 2.